A Good Life

IS THIS A MOMENT of cultural change? I see glimpses of a new way of thinking. The New York Times recently ran articles on both the cult of thrift and the financial independence/retire early—or FIRE—movement. Words like mindfulness, purpose and meaning have gained new currency. U.S. household debt is growing, but it’s still barely higher than a decade ago. The national savings rate even shows signs of improving.

Maybe this is yet another reverberation from the Great Recession. Maybe it’s financial necessity, as Americans adjust their lifestyle to their skimpy savings. Maybe our perspective on money is changing: The young are turned off by the work world’s brutally long hours and constant layoffs, while the old are realizing how little happiness money has brought them.

Gone is the obsession with The Good Life. We were raised to think that happiness lay in material goods and moments of relaxation. But the material goods proved disappointing and those moments of relaxation left us restless. Now, what people increasingly want is A Good Life—one that’s focused on time with friends and family, work that’s fulfilling and a sense of financial security.

I’m not suggesting everybody’s on board with this cultural shift. There are still plenty of folks who seek salvation at the shopping mall or one rung further up the corporate ladder. We’re hardwired to run the hedonic treadmill, confident that the next purchase, promotion or pay raise will finally bring lasting happiness, only to discover it doesn’t.

But it’s also possible to buck those hardwired instincts, cultivate new habits and learn new ways of thinking. Change isn’t easy, but it is indeed possible.

Think about the investment world. Most of us are inclined to be overconfident. One example: 65% of Americans think they’re more intelligent than average. In the past, that sort of overconfidence led many investors to try their hand at beating the market. But over the past decade, millions have realized that this overconfidence has cost them dearly, prompting them to shovel trillions of dollars into market-matching index funds.

Similarly, it’s possible to unlearn the beliefs that have left us going nowhere fast on the hedonic treadmill. As I’ve written elsewhere, I see this among my peers, those also in their 50s and 60s. After decades of disappointment, they’ve grown wiser about how to deploy their money for maximum happiness.

Ready to ditch The Good Life and pursue A Good Life instead? Here are half-a-dozen simple strategies, all drawn from my new book:

• Create a wish list of potential expenditures, stick it on the refrigerator and revise it constantly. That’ll prompt you to think harder about how you spend your money—and you’re more likely to use your dollars in ways that bring greater happiness.
• Think about which moments you enjoy the most during a typical week and which you dislike the most. See if you can pay others to do the tasks you loathe and use the freed-up time to focus on activities you truly enjoy.
• Figure out what causes you financial anxiety and then revamp your finances to ease those worries. Often, you can achieve substantial peace of mind simply by keeping a few thousand in the bank, ridding yourself of nonmortgage debt and saving regularly for the future.
• Make plans with friends and family—and, if you can, make them far ahead of time. Research says spending time with friends and family gives a huge boost to happiness. And if you hatch those plans far in advance, whether it’s making a restaurant reservation, buying concert tickets or booking a vacation, you’ll enjoy a long period of eager anticipation, which may prove more enjoyable than the event itself.
• Imagine the size of your paycheck didn’t matter. What sort of work would you do? You could indeed do that sort of work as a second career—if you prep your finances by saving diligently in the years ahead.
• On this earth, our only immortality is the memory of others. Think about how you would like to be remembered by friends and family. What would it take to create those memories—and are you taking the necessary steps?

Aw Shucks

“If you’re interested in improving your financial health or helping someone else repair theirs, run—don’t walk—to get this book.”—Tony Isola, A Teachable Moment

“It’s the first personal finance book I’ve read in quite a while that had me frequently taking notes for my own benefit.”—Mike Piper, ObliviousInvestor.com

“Jonathan Clements says you can build a happier, more prosperous financial life just by spending five or 10 minutes a day for 77 days. Dubious? I confess I was until I read his new book. Now, I’m a convert.”—Richard Eisenberg, NextAvenue.org

Latest Blogs

• Influenced by academic research, many investors lean toward small and value stocks. Adam Grossman asks, is it time to add a quality tilt?
• “Why do earnings drive share prices?” asks a perplexed Richard Quinn. “Because they create more value. Value for who? Shareholders. But how? Because they increase share prices. How much does this merry-go-round ride cost?”
• Looking to improve your finances? Phil Dawson read Jordan Peterson’s bestselling book—not once, but twice—and came away with a dozen financial lessons.
• “If you’re looking for a large reward for relatively little effort, I would argue that few endeavors can rival learning about finance,” writes John Lim.
• The official savings rate has been revamped—and it now looks like we’ve had a return to financial rectitude since the Great Recession. But is this happy story believable?
• “I longed to fall asleep to the sound of chirping crickets, rather than the noise of footsteps pacing back and forth above me,” writes Kristine Hayes. “And so, a few months ago, I began to contemplate becoming a homeowner again.”
• Eyeing a target-date fund? “Choosing an investment based on your age is like choosing clothing based on your age,” writes Adam Grossman. “It might be okay when you’re a toddler, but it makes little sense as you get older.”
• What would it take to put Social Security on a solid financial footing? Richard Quinn runs the numbers.
• Owning a home is now more taxing: The new law severely crimps deductions for mortgage interest, state and local taxes, and casualty losses, explains Julian Block.
• “I’m not sure hiring a financial advisor is a sign of getting old, but that’s the way it struck me,” writes Dennis Friedman. “I believe there could be a time when I can no longer manage my investment portfolio.”
• The problem isn’t finding great hedge funds and venture capital funds, says Adam Grossman. Rather, the problem is that—as an individual—you simply can’t get in.
• “I got a text from my loan officer,” recalls Kristine Hayes. “I nearly choked when I read the message. She told me I’d qualified for a $403,000 loan, with as little as a 5% down payment.”
• Creating a written budget, and then tracking your spending against it, is considered a sign of high financial rectitude. Here’s why you shouldn’t bother.
• “Many people see health insurance as the problem,” writes Richard Quinn. “It isn’t. Our problem is how we use health care. That’s what drives premiums and that’s what we must deal with.”
• How did Dennis Quillen recover from his gray divorce? He dumped his actively managed funds, cut his trading costs—and saved half his income.
• “We’re on dangerous ground and yet the [stock] market goes blithely on,” says Vanguard founder Jack Bogle. “You better save more money. You better get more costs out of the equation. It’s probably wise to sell to the sleeping point.”
• What caught readers’ attention in September? Check out the seven most popular blogs published by HumbleDollar last month.

Follow Jonathan on Twitter @ClementsMoney and on Facebook. His new book, From Here to Financial Happiness, can now be ordered from Amazon and Barnes & Noble. Jonathan’s most recent articles include Jack of Hearts, Budget Busting and All Better.